Flood Insurance

In a bulletin written for Write Your Own insurance companies last week, the Federal Emergency Management Agency (FEMA) said it will stop National Flood Insurance Program policy increases for certain subsidized policy holders beginning May 1. This move comes as a result of passage of the Homeowner Flood Insurance Affordability Act, passed into law in March.  

On May 1, direct servicing agents and Write Your Own insurance companies are directed to use the October 1, 2013 pre-Flood Insurance Rate Map (FIRM) subsidized rates for all new applications for flood insurance and renewal of flood insurance policies.  

The full bulletin is available to download here.

40th Annual Convention

IBAT is pleased to announce that Tom Hoenig, Vice Chairman of the Federal Deposit Insurance Corporation (FDIC), has accepted an invitation to speak at our 40th Annual Convention, September 27-30 at the Worthington Renaissance Hotel in Fort Worth.

Mr. Hoenig has been a tireless advocate for community banks and outspoken critic of public policy that created and sustains the implied government backstop for institutions deemed "too big to fail."  Prior to serving on the FDIC board, Mr. Hoenig was the President of the Federal Reserve Bank of Kansas City and a member of the Federal Reserve System's Federal Open Market Committee from 1991 to 2011.

Please save the dates and plan to be a part of IBAT's 40th Annual Convention. Attendee registration will open soon.  Until then, please feel free to review the tentative schedule and budget information to prepare for the event.

TILA/RESPA Compliance Guide

As featured previously, the CFPB recently released the Small Entity Compliance Guide for the TILA/RESPA Integrated Disclosure Rule. The guide is designed to help you complete the integrated TILA/RESPA disclosures when they become effective on August 1, 2015. The guide may be helpful in the months leading up to the effective date, as your bank considers how to implement the disclosures. The guide also includes all of the model forms.

Last week, the CFPB also released a guide to completing TILA/RESPA integrated disclosure forms.  The guide includes common situations that may arise when completing the forms.

Additionally, the CFPB's website has Loan Estimate and Closing Disclosure forms in both English & Spanish and samples for different loan types.

Storming the Hill

Some 160 Texas community bankers and industry partners are poised to descend on our nation's Capitol next week.  They will join over 1,250 community bankers from across the United States to participate in ICBA's Washington Policy Summit.

"We are gratified to see bankers answer the call and be active participants in the political process," said IBAT President and CEO Chris Williston.  "It's time for Congress to act and restore some stability and certainty to the current regulatory process and compliance burden which has disproportionately affected community financial institutions.  Grassroots advocacy is the most important and most effective in moving the legislative needle," he added.  

ICBA and IBAT have been leaders in trying to advance regulatory relief legislation in this Congress. Fifteen or more bills have been introduced to provide some level of regulatory relief in the House and Senate, many of which were inspired by the ICBA and IBAT "Plan for Prosperity."  Regulatory overkill, credit union expansion and taxation, patent reform, and GSE reform will be the primary issues discussed with members of the Texas Congressional delegation.

Key members of the House Financial Services Committee, along with Texas Senators John Cornyn and Ted Cruz, will address the entire group.  Group meetings are also scheduled with the Federal Reserve, FDIC, OCC and the CFPB.

BOCB Awards

Highlight your bank's involvement in your community and the exceptional projects you've undertaken during the past year by entering the 2014 Best of Community Banking Awards competition.  This is an opportunity to put the "best of the best" efforts of IBAT members on display.

Entry categories include Architectural Design, Financial Literacy, Community Service and Marketing.

Entries are due in the IBAT office by 5 pm on June 23, 2014.  A panel of judges will review each entry and all Gold, Silver and Bronze awards will be displayed during the Annual IBAT Convention.  Gold Award winners will be recognized at the Best of Community Banking Awards Luncheon on September 29 at the Worthington Renaissance Hotel in Fort Worth.

For more information, go to the IBAT website or call Mae Beth Palone at 800-749-4228.

Baker Market Update: April 21, 2014

But wait, it’s not Friday. No, it’s not, but it is the last day of the week. [Friday], credit and equity markets will be closed for Good Friday, and for some of us, that makes for a great Friday. So, while there is not as much week to review this week, the week we’ve had has been busy.
Things got off to a pretty good start [last] Monday with the release of a 1.1% monthly increase in Retail Sales. Maybe this means we’re coming out from under the deleterious effects of winter’s harshness. A rebound was also experienced in last week’s Mortgage Applications.

Read more in the Baker Market Update

Congressional Visit

While we have a great group of Texas community bankers and friends headed to D.C., once again, there's always room for you!  Deadlines are fast approaching, and March 28 is the last day we can guarantee rate or availability at the Omni Shoreham Hotel.

The IBAT trip is again being held in conjunction with the ICBA Washington Policy Summit, and attendees will have the opportunity to participate in meetings with influential lawmakers and regulators throughout the week.  We are pleased to report that both of our Texas Senators are confirmed for our customary group meeting, and we are working on finalizing the schedule with several additional prominent members of Congress.  

"Our annual trip to Washington is one of the most meaningful things we do to make a difference," said Chris Williston, IBAT President and CEO. "Community bankers are a powerful and respected force, and nothing makes a bigger statement than to have an office full of busy people who took the time to travel to D.C. to tell their story."

Will you consider joining your colleagues in D.C.?  Registration and additional information is available on our website, or call us at 800-749-4228  

Small Business of the Year

Vintage Bank was presented with the Small Business of the Year award by the Waxahachie Chamber of Commerce at its 2014 Waxahachie Chamber of Commerce Membership Banquet on February 27.

Vintage Bank has served Ellis County with local community banking since 2001. The bank has three branches in Ellis County. Construction of a new facility in Red Oak is scheduled to open early summer.

With $170 million in assets, Vintage Bank is strong and known for its customer service and dedication to the community it serves.

Photo: Pam Underwood, President and Jeff Frazier, Chairman

CECL Model Guidance

During a recent Financial Accounting Standards Board (FASB) meeting, two key decisions were announced related to the Current Expected Credit Loss (CECL) model. The FASB is currently discussing the proposed Accounting Standards Update, Financial Instruments-Credit Losses (Subtopic 825-15), with the goal of developing final guidance for the impairment of financial assets. The March 12 meeting minutes call for the final ASU to be issued in the second half of 2014. 

The other key decision made states that the current CECL model should apply to all financial assets. This means all public and private financial institutions will be subject to the new requirements once announced and implemented.

The proposed CECL model, originally released in December 2012, has been a topic of much debate. In its present form, it will require institutions to recognize an immediate allowance for credit losses that represents all expected losses. The OCC’s Thomas Curry is on record stating the proposed model will likely increase a bank’s ALLL reserve by 30-50 percent.  In October of 2013, IBAT weighed in with FASB on the proposed rule via a comment letter, calling the proposal “complex and cumbersome.”  We are continuing efforts to protest this burdensome and unnecessary “piling on” to community bank regulatory burden and IBAT members are encouraged to keep up the pressure on FASB by submitting comment letters of their own.

IBAT Associate Member, Sageworks, has developed a FASB CECL preparation kit to assist community bankers in learning more about the data requirements and to prepare for the change.  Sageworks also provided content for this article.  It is important to note that the preparation kit is based on the CECL as it is proposed, and changes are (we hope) likely in the final rule.  Click here to download the kit.  

April Consumer Tips

With April's Financial Literacy Month under way, IBAT has begun to distribute Consumer Tips - Personal Finance Principles Every Child Should Know.  

This month's tips were drafted by Judy Haley, a retired high school teacher from Longview, TX, and faculty member of the IBAT Teach the Teacher Program™, which provides instructional methods to engage teachers and students in practical conversations about personal financial management. She is also a past winner of the IBAT Teaching Excellence in Financial Literacy Award.

As always, IBAT members are encouraged to distribute the tips to their local papers, in bank publications or in any other way you'd like. A customizable version of the release is available upon request.

Corporate Cybersecurity

Last week a federal judge held that the United States Federal Trade Commission (FTC) has the authority to regulate the cybersecurity practices of many U.S. corporations.

The ruling came in a case in which the Wyndham hotel chain was challenging the right of the FTC to regulate data security practices under Section 5 of the FTC Act, which prohibits “unfair” or “deceptive” trade practices.  The FTC has been increasingly active in this area in recent years, handing out monetary penalties and, in some cases, twenty years of mandatory third-party audits of privacy practices. 

While community banks are not affected by the ruling because they are not regulated by the FTC, it stands as a critical setback for retailers, already under increased scrutiny following headline data breaches over the past six months. 

The FTC has failed to publish a standard set of data security practices, leaving retailers no recourse but to review the Commission’s earlier complaints against companies to understand expectations. 

Second Lien HE Loans

The Texas Supreme Court’s denial of claim in Porterfield v. Patton et al., issued last week, effectively saved second lien home equity loans in the state. The Court correctly denied Porterfield’s claim that Patton, the substitute trustee under a purchase money deed of trust, should have paid some of the cash proceeds from a foreclosure to the homeowner (Porterfield) and not to the home equity lienholder (America’s Servicing). Porterfield claimed that:

  1. America’s Servicing must obtain a court order before it may foreclose its lien, and
  2. The deed of trust granted the home equity lender a lien against the homestead property only and not against excess cash proceeds remaining after the foreclosure of the senior deed of trust.

The trial court ordered Porterfield recover nearly $300,000. The defendants appealed, IBAT filed an amicus curiae brief supporting the defendants, and the appeals court reversed the trial court’s decision and rendered a take-nothing judgment against Porterfield. The Texas Supreme Court has now affirmed the appeals court ruling by denying Porterfield’s Petition for Review.

Online Security

Last week the media was abuzz with news of the Heartbleed bug, an apparent weakness in internet security protocols which allows hackers to peek on packets of secure information transmitted between users and web servers. CalTech, an IBAT Associate Member, reports that they did not find many of their clients' “in-house” servers or services that were affected, but suggested checking services provided by other 3rd party vendors.

CalTech recommends the following steps to determine whether any of your other systems might be infected:

  1. Browse here and enter in the domain name you would like to check. The report page will appear and in the summary it will state one of the following:

    "This server is vulnerable to the Heartbleed attack. Grade set to F. (Experimental)”
    “This server is not vulnerable to the Heartbleed attack. (Experimental)”

  2. If a system is vulnerable to the Heartbleed bug, then contact that vendor for an update on when their systems will be patched. They can also provide to you any additional actions you should take to protect your organization.

Additionally, the FFIEC and IBAT Endorsed Service Providers Dell SecureWorks and Deluxe published advisory actions on this issue

Baker Market Update: April 11, 2014

In an age characterized by the instantaneous global distribution of information; in an age where high-frequency traders look for timing advantages measured in nano-seconds; in an age where waiting more than five seconds for Google to answer a question is “forever”, it seems incongruous that something that occurred weeks ago could have any contemporaneous relevance. And then there’s the FOMC. Wednesday’s release of the post-mortem of the Committee’s March meeting still managed to influence financial markets. The new news about the old news provided comfort and reassurance to those market participants still wary of a Central Bank they perceive to be transitioning to a more restrictive monetary... Read more in the Baker Market Update

Lending Compliance Summit

Join IBAT's general counsel, Karen Neeley, at the 12th annual Lending Compliance Summit.  This commercial and consumer lending summit will provide an overview of recent regulatory changes, litigation of interest, as well as practical recommendations for implementation at community banks, including:

  • Fair Lending - There are a myriad of commercial and consumer Fair Lending issues, including auto dealer paper, small loan programs, loan officer discretion in lending, rate sheets, and the safety and soundness implications of deciding to not make HPMLs, to name a few.  We will help you identify and understand the issues and give you the tools to operate compliant lending programs.
  • Home Equity Lending - Learn the current status of home equity lending in light of recent significant court cases.  We will explore other issues including the differences between the allowable fees in Qualified Mortgages and the Texas home equity laws.
  • Unfair, Deceptive, Abusive Acts and Practices - We will help you identify which practices may get you in trouble, how to avoid them, and what to do when you hear your regulator speak one or more of these dreaded words.

Integrated Disclosure - The CFPB has issued its final Reg. Z/RESPA Integrated Disclosure that goes into effect in late 2015.  We will discuss the disclosure and tell you what you should be doing to get ready for its implementation

Congrats Cynthia!

IBAT would like to congratulate Cynthia Dopjera on being selected as one of the nine finalists for the 2014 "Outstanding Women in Banking and Financial Services." A luncheon celebration to acknowledge the finalists and announce the honorees will be held on April 22, 2014, from 11:30 a.m. - 1:00 p.m.. To be part of this special event, or to learn more, please click here